Correlation Between GT Capital and Basic Energy
Can any of the company-specific risk be diversified away by investing in both GT Capital and Basic Energy at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining GT Capital and Basic Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GT Capital Holdings and Basic Energy Corp, you can compare the effects of market volatilities on GT Capital and Basic Energy and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in GT Capital with a short position of Basic Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of GT Capital and Basic Energy.
Diversification Opportunities for GT Capital and Basic Energy
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GTCAP and Basic is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding GT Capital Holdings and Basic Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basic Energy Corp and GT Capital is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on GT Capital Holdings are associated (or correlated) with Basic Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basic Energy Corp has no effect on the direction of GT Capital i.e., GT Capital and Basic Energy go up and down completely randomly.
Pair Corralation between GT Capital and Basic Energy
Assuming the 90 days trading horizon GT Capital Holdings is expected to under-perform the Basic Energy. But the stock apears to be less risky and, when comparing its historical volatility, GT Capital Holdings is 1.83 times less risky than Basic Energy. The stock trades about -0.2 of its potential returns per unit of risk. The Basic Energy Corp is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Basic Energy Corp on August 29, 2024 and sell it today you would lose (1.00) from holding Basic Energy Corp or give up 7.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GT Capital Holdings vs. Basic Energy Corp
Performance |
| Timeline |
| GT Capital Holdings |
| Basic Energy Corp |
GT Capital and Basic Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GT Capital and Basic Energy
The main advantage of trading using opposite GT Capital and Basic Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GT Capital position performs unexpectedly, Basic Energy can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Basic Energy will offset losses from the drop in Basic Energy's long position.| GT Capital vs. Alliance Select Foods | GT Capital vs. Prime Media Holdings | GT Capital vs. Manila Mining Corp | GT Capital vs. STI Education Systems |
| Basic Energy vs. Oriental Petroleum and | Basic Energy vs. GT Capital Holdings | Basic Energy vs. Allhome Corp | Basic Energy vs. Jollibee Foods Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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